Drago operated Kayla Check Cashing Corp., North Island Check Cashing Corp., South Island Check Cashing Corp., East Island Check Cashing Corp., Bay Shore Check Cashing Corp. and Brentwood Check Cashing Corp.
On Thursday, Long Island business owner John Drago entered a guilty plea to fraud charges for evading taxes and illegally structuring transactions at multiple check cashing stores. He faces up to ten years in prison.
John Drago, 57, of Central Islip, agreed to forfeit $253,000 and pay $593,000 in restitution during a court appearance in Central Islip before U.S. District Judge Gary R. Brown. Drago faces up to 10 years in prison when he returns to court for sentencing on Feb. 11, 2022. Drago also agreed to surrender his check-cashing licenses and his federal money services business registrations. He is barred from applying for those licenses or registrations in the future.
“Drago’s guilty plea makes clear that running a check cashing business is not a license to evade financial reports to cheat the IRS or a blank check for committing fraud,” stated Acting United States Attorney Jacquelyn Kasulis.
Drago’s attorney, Anthony Capozzolo of New York, said: “Mr. Drago is happy to resolve the case today and he is looking forward to sentencing and getting this matter behind him.”
He said after the judge ruled on what evidence could be admitted, the prosecutors and defense arrived at a plea agreement.
Drago, of Central Islip, was the owner of Kayla Check Cashing in Farmingdale, South Island Check Cashing in Wyandanch, East Island Check Cashing Corp. in Hauppauge, Bay Shore Check Cashing Corp. and Brentwood Check Cashing Corp.
Financial institutions are required to file a currency transaction report for each cash transaction in excess of $10,000, prosecutors said. A report is also required when customers file multiple checks in excess of $10,000 on a single day.
From January 2010 to Oct. 31, 2013, Drago instructed employees to tell customers with checks exceeding $10,000 to return with multiple checks less than $10,000 to avoid reporting requirements. As a result, more than $9.5 million in check cashing transactions were concealed from the IRS, prosecutors said. Drago also paid overtime wages and commissions to employees in cash between April 1, 2012, and July 31, 2013, in order to avoid paying the full amount of Federal Insurance Contributions Act taxes his company owed, prosecutors said.
IRS-CT Acting Special Agent-in-Charge Thomas Fattorusso said Drago’s fraud will impact his employees’ future Social Security, Medicare or unemployment compensation benefits.
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